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Limits raised on USDA farm loans

USDA loan limits have been raised. It means borrowers can get more USDA money for farm loans to purchase farms or cover operating expenses. Farm Service Agency Administrator Richard Fordyce tells Brownfield the 2018 Farm Bill provision results in loans fitting into current capital needs.

“It’s a little more representative of the capital requirements to operate a farm,” Fordyce tells Brownfield Ag News. “It’s probably a little bit more in line of what requests, maybe, are coming from current customers and then potentially other customers that come our way.”

Key changes include:

•        The Direct Operating Loan limit increased from $300,000 to $400,000, and the Guaranteed Operating Loan limit increased from $ 1.429 million to $1.75 million. Operating loans help producers pay for normal operating expenses, including machinery and equipment, seed, livestock feed, and more.

•        The Direct Farm Ownership Loan limit increased from $300,000 to $600,000, and the Guaranteed Farm Ownership Loan limit increased from $1.429 million to $1.75 million. Farm ownership loans help producers become owner-operators of family farms as well as improve and expand current operations.

•        Producers can now receive both a $50,000 Farm Ownership Microloan and a $50,000 Operating Microloan. Previously, microloans were limited to a combined $50,000. Microloans provide flexible access to credit for small, beginning, niche, and non-traditional farm operations.

•        Producers who previously received debt forgiveness as part of an approved FSA restructuring plan are now eligible to apply for emergency loans. Previously, these producers were ineligible.

•        Beginning and socially disadvantaged producers can now receive up to a 95 percent guarantee against the loss of principal and interest on a loan, up from 90 percent.

Fordyce says natural disasters, trade disruptions, and persistent commodity price pressure make farm loans increasingly important.

AUDIO: Richard Fordyce

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